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Predictions Made

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Discussion

This is a very (too?) complex question. Not sure what you mean by “expire” AND “increase” — what if only one of these things take place? It seems to me you should separate this into at least 2 questions.

Rationales

"Tax increases ain't gonna happen anytime soon."

mvguy sold at 50.00%

November 09, 2010 @ 03:50pm PST

historical trend

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Background information

Assuming that the current tax rate is allowed to expire, investors will soon pay nearly 40% on qualified dividends – up from the 15% rate they pay today.

Barron's reports that Michael G. Morris, CEO of American Electric Power Company (NYSE: AEP), is lobbying hard to keep the rate intact. He said that while he understands that the government is looking to raise additional funds, only 2% of Americans live off dividends. But the higher tax rate would a hit a broad base of Americans, including retirees.

In many jurisdictions, the government requires the company to withhold at least the standard tax, paying this to the national revenue authorities and paying out only the balance to the shareholders.

Characterization of dividend income

In most jurisdictions worldwide, dividend payments are considered ordinary income and are taxed as such, the same as if the taxpayer had earned the income working at a job. Other jurisdictions separate dividend income and characterize it as something other than ordinary income subject to different tax rates if taxed at all.

Controversy

Depending on the jurisdiction dividend income along with interest income, collected rents, or other "unearned income" may also be taxed and is the subject of recurring debate as to whether or not these taxes should be eliminated

NOTE: I have placed this question in the "Political" arena as it will take Congress to determine what will take place.